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Profitability Ratios

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Easter Egg and Poultry Company has $2,000,000 in assets and $1,400,000 of debt. It reports net income of $200,000. What is the firm's return on assets? What is its return on stockholders' equity? If the firm has an asset turnover ratio of 2.5 times, what is the profit margin (return on sales)?

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Solution Summary

The solution explains the calculation of different profitability ratios

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Return on Assets = Net Income/Total Assets = 200,000/2,000,000 = 10%
Return on Equity = Net ...

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